Altria Stock Reaches 52-Week High: Time to Capitalize or Wait?

Altria Group, Inc. MO has been making waves in the market, with its stock hitting a new 52-week high of $58.04 on Wednesday before pulling back to close at $57.65, still near its peak. The leading tobacco giant has been on a remarkable run in 2024, with its stock gaining 43.1% year to date (YTD). This growth has outpaced the 36.4% rise of the Zacks Tobacco industry, attracting attention from investors. In comparison, the broader Zacks Consumer Staples sector has rallied by 5.8% and the S&P 500 has grown 26% over the same period.The MO stock has outperformed industry players such as Philip Morris International Inc. PM and British American Tobacco p.l.c. BTI YTD. Over this period, PM has experienced a 40.2% rise and BTI has seen a 29.6% jump in its stock price. Altria's strong performance highlights its growing smoke-free portfolio and efficiency initiatives, solidifying its leadership in the tobacco industry's transition to a smoke-free future.MO’s Price Performance Image Source: Zacks Investment Research Assessing Altria’s Key Technical IndicatorsAs we assess Altria’s impressive price performance, it is important to dive deeper into the key technical indicators currently shaping its outlook. Technical indicators suggest a continued strong performance for the company. The stock is trading above its 200-day and 50-day simple moving averages (SMAs), signaling robust upward momentum and price stability. This technical strength underscores positive market sentiment, and confidence in MO's financial health and prospects.MO Trades Above 50 & 200-Day Moving Averages Image Source: Zacks Investment Research Let us examine the key factors driving its performance and evaluate its growth potential, helping investors decide if now is the time to capitalize on its bullish momentum.Altria's Transition to Smoke-Free FutureMO is making impressive progress in its ambitious journey toward a smoke-free future, with a clear focus on harm reduction, regulatory compliance and innovative alternatives for adult smokers. By prioritizing reduced-risk products, the company is redefining its role in the tobacco industry and paving the way for a healthier future for its customers.NJOY, a core part of Altria's transformation strategy, is solidifying its position in the competitive e-vapor market. In the third quarter of 2024, NJOY achieved impressive growth, with its Net Promoter Score improving more than 20 points from 2023, driven by strong product satisfaction, enhanced retail visibility and effective marketing campaigns. The brand's consumable shipment volume rose more than 15% to 10.4 million units in the third quarter. Device shipments nearly tripled to 1.1 million units, reaching 3.9 million units YTD. In addition, NJOY expanded its retail market share for consumables to 6.2% in the third quarter, marking a 2.8-point increase from last year and a 0.8-point rise sequentially. This was complemented by the robust performance of Altria’s oral nicotine pouch brand, on!, which saw a 46% year-over-year increase in shipment volume in the third quarter. The brand now holds an 8.9% retail share in the oil tobacco product category.In line with its smoke-free vision, Altria announced the launch of an "Optimize and Accelerate” initiative aimed at modernizing operations, leveraging technology and achieving at least $600 million in cost savings over the next five years. With its focus on innovation, regulatory collaboration and operational efficiency, the company is positioning itself as a leader in the transition to a smoke-free future.Altria’s Pricing Power & Diversification Drive GrowthAltria has leveraged its strong pricing power to navigate challenges and maintain profitability. In the third quarter, higher pricing strategies aided revenues across the Smokeable Products and Oral Tobacco categories. This focus on pricing strength has enabled the company to drive profitability in key segments, showcasing the company’s resilience in a competitive market.In addition to pricing, Altria is advancing its diversification efforts through partnerships. The joint venture with Japan Tobacco for the Ploom heated tobacco device is a key step into the growing heated tobacco market. With combined PMTA and MRTP filings planned for the first half of 2025, Altria is well-positioned to capture opportunities in this expanding segment.Is MO’s Valuation Still Attractive?Despite the recent uptick in stock price, Altria remains an attractive investment from a valuation standpoint. The company's shares trade at a notable discount compared with industry peers like Turning Point Brands, Inc. TPB. With a forward 12-month price-to-earnings ratio of 10.90, below the industry’s average of 12.74 and the S&P 500’s average of 22.49, MO stock offers compelling value for investors seeking exposure to the sector.Altria Stock Looks Undervalued Image Source: Zacks Investment Research What Could Derail MO’s Growth Trajectory?Altria’s push into the smoke-free category faces a growing obstacle as illicit flavored disposable e-vapor products are growing rapidly, with the number of users increasing 45% in the past year. These products undermine the company's efforts in the e-vapor segment, wherein NJOY's market share is growing but remains somewhat overshadowed by illicit products. This trend not only impacts Altria's revenue potential in the smoke-free segment but also complicates regulatory enforcement efforts. Despite MO's active engagement with regulators, the growing presence of unauthorized products continues to hinder the market potential for its compliant offerings, such as NJOY and on!.Adding to these challenges, Altria’s domestic cigarette volumes have registered an adjusted decline of 11.5% in the third quarter of 2024. This is steeper than the industry’s estimated adjusted volume decline of 9%. Such a trend reflects challenges in sustaining growth in Altria's smokable products segment, which is still its core revenue-generating category. Meanwhile, analysts have reduced projections by a penny in the past 30 days for Altria's fourth quarter earnings. The Zacks Consensus Estimate is pegged at $1.28 per share for the quarter. Despite this minor downward revision, the broader outlook for Altria appears stable. The consensus estimate for earnings has been unchanged at $5.11 per share for the current year and $5.30 for the next year.Find the latest EPS estimates and surprises on Zacks Earnings Calendar.Is it Still Wise to Retain Positions in MO Stock?Although challenges like declining cigarette volumes and competition from illicit e-vapor products warrant attention, Altria’s discounted valuation relative to the industry provides a margin of safety. This makes it an appealing option for long-term value-focused investors.Those already holding the stock may find it prudent to maintain their position as the company advances its smoke-free strategy and leverages its pricing power for sustained growth. At present, Altria carries a Zacks Rank #3 (Hold).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Free Today: Profiting from The Future’s Brightest Energy SourceThe demand for electricity is growing exponentially. 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(BTI): Free Stock Analysis Report Turning Point Brands, Inc. (TPB): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks